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Why do I believe you? Bitcoin

Big guys say bitcoin

Li Xiaolai, a veteran bitcoin investor, owns 6-bit bitcoin, which is worth about 10 billion yuan at current market prices. He once said:

Bitcoin, like all history in history, grows in the midst of doubt and matures in accusations of abuse.
I'm afraid to say that bitcoin has to do with historical progress; but what I can be sure of is that bitcoin's prices and market value are really growing, climbing, and screaming and questioning one after another.

Among the skeptics, the most famous is Buffett's partner, Berkshire vice president - Charlie - Munger. Here's his original address at the University of Michigan Rose conference:

Be sure to find out what they are (virtual currency) and stay away from them as far away as the plague. One of them is bitcoin. . . . . . It is completely nonsense.

Professor Lang Xianping, who is most familiar with the country, also shelled bitcoin several times, claiming that even if someone gave him bit by bit, he did not want to:
As the saying goes, the butt decides the head, and people with different positions have different opinions about the same thing. Li Xiaolai has benefited from bitcoin, saying that bitcoin is good. As a vested interest in the existing social and financial system, Lang and Ping-Mungh, understandably bad things about bitcoin, a new birth that could threaten his job.

Looks really hurt brain, big guys have their own argument, in the end who believe it? My answer is:

No one wants to believe, believe in yourself.

I did some thinking by reading related books, combining basic logic with my own experience and cognition, reached some conclusions, and I welcome everyone to exchange and correct me.

Bitcoin is a payment system
Bitcoin prices so high, you go to the forum or community to ask bitcoin price is based on what someone must have told you:

The price is based on consensus. Consensus is that everyone trusts it. In other words, everyone's trust is the basis of bitcoin's price.

However, what trust? What is the basis of trust? Only by answering this question can we find the real answer to the question.


In the white paper, bitcoin is described as a point-to-point electronic cash payment system that enables online payments to be initiated directly by one party and paid to the other without the need for any financial institution.
Decentralization + Algorithm = Security
Safety is always the number one priority, especially for transactional payments. Bitcoin security is divided into two different levels:

System safety: a system that never dies
The design of bitcoin system is based on P2P architecture, that is, point-to-point architecture. All computers on the Internet act as independent individuals, directly or indirectly connected to form a dense network, the information sent by a computer can eventually spread to every node on the network.

This architecture is relative to the C / S architecture, and P2P networks, C / S network, a computer's information must be sent to the server, and then by the server to other computers proliferation.

For example, in Team A, team members can communicate with each other without restriction. In Team B, there is a team leader who can not communicate directly with each other and must communicate with other team members through team leaders.

Obviously, the flow of information in Group A is more free and full, and the departure of any one person will not have a big impact on the group, and the group can still operate normally. In Group B, there is no problem in normal communication. If the team leader is in a situation, the team can not run because all the communications must be relayed by him. A group is a P2P network, any one computer problems or leave, the system can still operate normally, there is no absolute center, is a decentralized network. B group is the C / S network, the team leader is the center server, once it collapsed, the entire system is finished, the system depends on the center, which is a centralized network.




The most-contact transaction payment platform in our daily life, such as Alipay, WeChat payment and mobile banking, is essentially based on the application of a centralized network. The transaction data is confirmed, transit and stored by the huge central server of Alipay, Tencent and the bank . Once the central server has been paralyzed by hackers, the entire trading system will be paralyzed. 
Bitcoin as P2P to centralize the network, once started, it can not be closed. in other words:

As long as the Internet exists, bitcoin will never die.
Financial security: transaction data that can not be tampered with
Some people would say that the transaction data can not be tampered with is not what advantage, banks, Alipay money also see less than a cent. True, this is true in the general case, but see the following example:

In March 2013, a banking crisis broke out in Cyprus. In order to get EU financial assistance, the government of Cyprus reached an agreement with the "Troika" consisting of the European Union, the European Central Bank and the International Monetary Fund: in excess of 100,000 euros in deposits over € 100,000, 37.5% was converted to the Bank of Cyprus Equity, 22.5% were frozen, the remaining 40% were temporarily frozen until the end of the aid.
Do not say this thing will not happen, nothing is absolutely impossible. This is a flaw in a centralized organization. In the extreme case, the center's rights institutions sacrifice the private property and interests of citizens in order to protect themselves. The bank to freeze the assets of citizens should not be too simple, because the funds and transaction data are stored in its central server, moving fingers on it.

The bitcoin system account funds, transactions and other data, not by the central organization to maintain and store, but by a code written to the system rules and algorithms, access to the system by a node to maintain.

If an authority wants to "control" the entire system, it must first have more than 50% of the system's power to attack the system. This is not hard for national machines.

However, even with enormous computational power, the so-called "control" that it can do can only modify its own transaction records and can not send bitcoin that does not belong to itself for its own sake. The "control" it possesses is totally different from the control in the real world.

In addition, the benefits brought by the attack and input costs serious upside down, who will damage people do not own things? Attacks may be only theoretical in nature.

Even the state machine can not really control the bitcoin system. Then a single node, or node formed by the group is even more impossible.

As Li Xiaolai said:


Bitcoin creates a trust that does not require trust.
Do not rely on any authority or person, code is law. Cold math algorithms and code give us a warm contract and trust, bitcoin at this peak.

Efficient, convenient and low cost
Bitcoin is Internet-based, and as long as you have Internet access, Bitcoin can be reached and is very convenient.

Internet banking and Alipay seem to do it too. But if the funds to cross national boundaries, circulation in the world? China's banks and Alipay, may not be recognized abroad. Even with the recognition of the foreign banking system, there is also a huge amount of capital and resources prior to investment. As you can imagine, the handling fee will not be low.

You do not forget, there are many places in the world, the lack of sound financial infrastructure and systems, banks and Alipay are simply unable to enter, where bitcoin is popular. May also be because of the war years after year, the local legal tender because of the lack of strong government credit endorsement, serious devaluation. Bitcoin can be used as a common currency to provide convenience and support for people's lives.
It is undeniable that the current Bitcoin transaction validation efficiency is not yet comparable with banks, Alipay, but follow-up if it can successfully introduce the lightning network, or can be worth the wait.
Transaction costs, because of the size of the block, transaction costs are also rising. However, bitcoin cash, split off by the Bitcoin backbone, is committed to achieving a low-cost point-to-point cash transaction system that does not differ from the Bitcoin host system and that transaction costs are favored and may be a new option.
Extra benefits: Circulation is constant
In the Bitcoin system, the total amount of Bitcoin issued has been set at 21 million.

What does this mean? If bitcoin is accepted by more and more people, the total amount of transactions and social wealth borne by Bitcoin will continue to increase. At the same time, the total amount of distribution is certain, so one can imagine, the price of a single bitcoin must be higher and higher. In other words, bitcoin in your hand is getting more valuable, while the price of bitcoin-denominated goods is getting lower and lower.

This is not very counterintuitive, and in real life the prices of commodities quoted in the French currency have risen in sharp contrast. That's right! Even if you do not participate in bitcoin investment transactions, ordinary people can enjoy the benefits of bitcoin appreciation just because they hold bitcoin.

Wait, Charlie - Munger have something to say:

You have to know that gold is hugely valuable because it can not be manufactured out of thin air and people can not easily get it, so it is extremely scarcity. Believe me, people will certainly be able to make more bitcoin. . . . . . They tell you bitcoin is a rule, so they can not do that, but do not trust them. Anything bad can happen when you have a sufficiently high incentive incentive. "
I agree with Charlie's logic, but do not agree with his conclusion. There is indeed the possibility of increasing the total number of shares for the benefit of the public. So what? I can choose to leave it! And, I tell you, if that's true, there must be competitors, developing new systems, the total set to remain unchanged. why? Because this is what users value. Without this, you may even lose the market and your job.

We are all smart people, do you think anyone developing a bitcoin team can not think of it? To a little petty profit, lost his job, lost his wife and soldiers, who will do it?

Last words
Well, to say so much, I just want to remind you again:


Do not believe in any of my words, always believe your own judgment.